Economics: America Is Europe

The U.S. does not have a significantly smaller welfare state than the European nations. We're just better at hiding it. The Europeans provide welfare provisions through direct government payments. We do it through the back door via tax breaks.

The Organization for Economic Cooperation and Development recently calculated how much each affluent country spends on social programs. When you include both direct spending and tax expenditures, the U.S. has one of the biggest welfare states in the world. We rank behind Sweden and ahead of Italy, Austria, the Netherlands, Denmark, Finland and Canada. Social spending in the U.S. is far above the organization's average.

You might say that a tax break isn't the same as a spending program. You would be wrong.

David Bradford, a Princeton economist, has the best illustration of how the system works. Suppose the Pentagon wanted to buy a new fighter plane. But instead of writing a $10 billion check to the manufacturer, the government just issued a $10 billion weapons supply tax credit. The plane would still get made. The company would get its money through the tax credit. And politicians would get to brag that they had cut taxes and reduced the size of government!

This is essentially what's been happening in sphere after sphere.

For more, see America Is Europe by David Brooks, February 23, 2012 at NYTimes.com.